At the annual meeting of the World Economic Forum (WEF) in Davos, Switzerland, the Iberian Industry and Energy Transition Initiative (IETI) presented an ambitious vision for Europe’s reindustrialisation and competitiveness through energy transition.

Senior Partners at McKinsey, the CEOs and chairs of several IETI members, including BBVA, EDP, Iberdrola, Moeve, Naturgy, Repsol, and Santander, as well as Teresa Ribeira, Executive Vice-President of the European Commission for a Clean, Fair, and Competitive Transition were present at the meeting.

The urgency of the energy transition

The energy transition presents a significant opportunity as Europe struggles with deindustrialisation and deteriorating competitiveness brought on by a lack of investment in innovation and rising energy prices. McKinsey estimates that by 2030, the added value might reach one billion euros, which is three to six times the yearly expenditure needed to achieve net-zero targets.

Teresa Ribeira, Executive Vice President of the European Commission for a Clean, Fair, and Competitive Transition, highlighted during the working session, that there is a need for industrial climate policies that provide clear demand signals and encourage large-scale transformations with the predictability needed to ensure competitiveness.

Portugal and Spain as central hubs

Due to their abundant resources, existing infrastructures, and strategic location, Portugal and Spain are positioned as central hubs for Europe’s energy transition and reindustrialisation. The region boasts renewable energy costs 20-25% lower than Central Europe, creating significant competitive advantages.

According to IETI, the potential benefits include a 15% increase in Iberian GDP, the creation of approximately one million jobs, 20% of which are highly qualified (300,000 in Portugal and 700,000 in Spain), a 5-10% increase in state revenues, and up to a 20% rise in national exports.

The CEO of EDP, Miguel Stilwell d’Andrade stressed that Portugal and Spain have an extraordinary opportunity to lead Europe’s energy transition but noted that simplifying licensing processes and investing in power grids are essential to unlocking the full potential of the Iberian “green hub”. As the CEO stated, “Spain and Portugal have an extraordinary opportunity to lead the energy transition and competitiveness of Europe, taking advantage of their abundant natural resources, ambitious targets for renewable energy and innovative energy solutions”.

Existing and emerging industries

Portugal and Spain can help established industries while attracting new ones by focusing on data centre green hydrogen, renewable energy, and mobility. The area can take the lead in producing biofuels, batteries, wind, and solar energy. Furthermore, producing green hydrogen in the Iberian Peninsula is 10-20% less expensive than in Central Europe, promoting regional value chains and helping Europe meet its climate targets.

Moreover, tech companies looking to create low-carbon digital centres find the Iberian Peninsula appealing due to its strong infrastructure and affordable energy costs. There is a lot of opportunity in the transportation sector to promote the switch to electric vehicles and provide sustainable fuels.

Ignacio S. Galán, Chairman and CEO of Iberdrola, stated that electrification is unstoppable, claiming that the Iberian Peninsula can provide 24/7 renewable energy, strengthening European energy security, driving industrial growth, and protecting the environment. "Europe must leverage its resources: wind, sun and water, which allow for stable prices and significantly reduce imports. Unlike other countries, such as the United States, we do not have oil or gas reserves, but we do have renewable energies that generate electricity at competitive prices and strengthen an efficient value chain that creates industrialdevelopment”, Iberdrola’s CEO shared.

Key priorities for action

To capitalise on these opportunities, IETI advocates for essential measures such as creating incentives to bridge the gap between green solutions and fossil fuels, ensuring stable and predictable regulations for projects, and expediting licensing processes. Reducing bureaucracy, providing robust financing schemes, and attracting investors to sustainable projects are also critical. Furthermore, modern infrastructure planning and implementation are vital to support increasing electrification.

These measures aim to transform the Iberian Peninsula into a central hub for Europe’s energy transition, boosting the economy, creating skilled jobs, and promoting industrial sustainability. Francisco Reynes, Executive Chairman of Naturgy, defended that Iberian countries have a unique opportunity that cannot be missed, and simpler regulations are key to attracting investments.

The energy transition offers Portugal and Spain an unprecedented opportunity not only to lead Europe’s decarbonisation but also to revitalise their industries and strengthen their economies. Maarten Wetselaar, CEO of Moeve, concluded that this is an opportunity none of the countries can afford to miss. If the right actions are implemented, everyone will benefit. “As the IETI report shows, the energy transition is a crucial driver of reindustrialisation for Europe. Green molecules are an essential part of the energy transition because industries need them, and Spain and Portugal have the conditions to produce some of the most competitive green molecules on the continent”, Maarten Wetselaar explained.

The Iberian Industry and Energy Transition Initiative is committed to ensuring that the Iberian Peninsula is at the forefront of the transition.

Author

After studying Journalism for five years in the UK and Malta, Sara Durães moved back to Portugal to pursue her passion for writing and connecting with people. A ‘wanderluster’, Sara loves the beach, long walks, and sports. 

Sara J. Durães